Facebook Said to Be in Talks to Bring Credits to Mobile Browsers
Facebook Inc. is in talks to let developers sell virtual goods within mobile Web browsers, part of an effort to generate more revenue from smartphones and tablet computers, three people familiar with the matter said.
The change would let developers use Facebook’s currency, called Credits, on mobile applications accessed over the Web, according to the people, who asked not to be named because the talks are private. That means Facebook could get about 30 percent of revenue generated by the sale of virtual goods. Right now, that commission typically goes to Apple Inc. (AAPL) or Google Inc. (GOOG) because they run the operating systems for phones.
The discussions are part of Facebook’s efforts to revamp its mobile strategy, helping the company take advantage of the shift to smartphones and apps. Facebook is one of the most popular mobile apps on Apple’s iPhone and Google’s Android, though it makes no revenue from the programs.
In an e-mailed statement, Palo Alto, California-based Facebook declined to comment on any plans for mobile Credits.
Developers of Facebook apps make money when users buy virtual items within their programs -- say, a pony in Zynga Inc.’s “FarmVille.” When customers make those purchases using Facebook on a computer, the company gets its cut. When it happens within the apps of Apple or Google, Facebook doesn’t.
Facebook is asking select developers to build versions of their applications for the emerging HTML5 Web standard, the people said. This provides a way to render graphics and animation through a Web browser without having a user download software directly to the device through Apple or Google’s application stores. The TechCrunch blog previously reported on Facebook’s HTML5 efforts.
Facebook, which has more than 750 million users, makes most of its money from ads. It’s likely to generate more than $2 billion this year in earnings before interest, taxes, depreciation and amortization, a person with knowledge of the matter said in May. The company is valued at $72.9 billion on SharesPost Inc., an exchange for shares of private businesses.
Facebook started testing Credits in 2009, in part to diversify its revenue sources. The system lets users buy items in different games using a single virtual currency, with a commission going back to Facebook. This year, the company made Credits mandatory for the sale of virtual goods in all applications on its site.
Virtual goods will be a $20 billion market by 2014, estimates ThinkEquity LLC. Spending on mobile games alone will generate $7.1 billion in sales that year.
Facebook is seeking to build a software community that rivals Apple’s. That company’s App Store boasts more than 425,000 programs, and it contributed to almost $1.4 billion in sales from Apple’s iTunes last quarter.
In another effort to help developers get more attention and make money, Facebook may include a separate news feed on its home page that displays activity in apps, three people familiar with the matter said. The news feed would appear on the right side of Facebook pages and include updates about what users are doing in games or other applications, the people said.
“We’re always testing new ways to improve app discovery on Facebook, however we have no further details to share at this time,” Facebook said in a statement.
To contact the reporters on this story: Douglas MacMillan in San Francisco at email@example.com; Brian Womack in San Francisco at Bwomack1@bloomberg.net; Adam Satariano in San Francisco at Asatariano1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at firstname.lastname@example.org